THE MEDIA BUSINESS; Internet Makes Dow Jones Open to Suit in Australia

The Australian High Court ruled yesterday that a local businessman could bring a libel action against Dow Jones & Company in a local court, a decision that reignited publishers' fears that posting material on Web sites could leave them open to libel prosecution in any country with Internet access.

A string of decisions like the one from Australia could ultimately end up restricting Internet communication, lawyers for a group of American and Australian publishers said. The fear, they said, is that the laws of the most censorious and autocratic governments could then be applied to material originating in countries with strong legal protections for speech and debate.

The Australian ruling -- the first by the highest court in any nation in which the Internet is in widespread use -- held that Joseph Gutnick of Melbourne could sue Barron's and its corporate parent, Dow Jones, in Mr. Gutnick's home state, Victoria, where the libel laws are quite strict.

Victoria ''is where the damage to his reputation of which he complains in this action is alleged to have occurred, for it is there that the publications of which he complains were comprehensible by readers,'' the opinion by four of the seven justices stated. The other three justices concurred in their own separate opinions.

The court reasoned that in the Internet era, libel occurs in the jurisdiction where articles are read, not where a publisher places material on an Internet server. Dow Jones lawyers said that several hundred people in Victoria use the Web site where the article was posted.

In the Barron's article from October 2000, the reporter, Bill Alpert, wrote in part: ''Some of Gutnick's business dealings with religious charities raise uncomfortable questions. A Barron's investigation found that several charities traded heavily in stocks promoted by Gutnick. Although the charities profited, other investors were left with heavy losses.''

The article continued: ''In addition, Gutnick has had dealings with Nachum Goldberg, who is currently serving five years in an Australian prison for tax evasion that involved charities.''

In an interview with Australia's Channel 9 television, reported by The Associated Press, Mr. Gutnick said that the decision would re-establish the principle ''that the Net is no different than the regular newspaper.'' He added: ''You have to be careful what you write.''

David Schulz, a lawyer for a group of publishers and Internet companies that intervened in the case -- a group including Amazon.com; Yahoo; The Associated Press; CNN; The New York Times Company; and News Ltd., Rupert Murdoch's Australian company -- said yesterday: ''In a nutshell, what the court said was that there is nothing wrong with an Australian court hauling Dow Jones into Australia to go to court.''

He added: ''If that becomes the law of the Internet, the problem isn't that individuals will be suing all over the world -- though that is a problem. The problem is that rogue governments like Zimbabwe will pass laws that will effectively shut down the Internet.''

Earlier this year, prosecutors in Zimbabwe brought criminal charges of ''publishing a falsehood'' against a reporter for The Guardian in Britain. He had written an article repeating another newspaper's charge that the suspected murderers of a young mother had ties to the party of President Robert Mugabe. The article was available in Zimbabwe only via the Internet. The reporter was acquitted, but then deported.

The Australian High Court ruling included a concurring opinion from Justice Michael Kirby, who wrote, ''Apart from anything else, the costs and practicalities of bringing proceedings against a foreign publisher will usually be a sufficient impediment to discourage even the most intrepid of litigants.''

But he said that the ruling left some questions unanswered and that the issues involved ''appear to warrant national legislative attention and to require international discussion in a forum as global as the Internet itself.''

Stuart Karle, a lawyer for Dow Jones, said yesterday that libel law in Victoria -- going further than even the strict British libel laws -- allows plaintiffs to bring suit based on their own particular interpretation of the offending passage in an article. Defendants are not permitted to suggest a more benign reading of the passage, he said.

''How are reporters in the future going to understand what legal standards are going to apply?'' Mr. Karle asked.

The Australian ruling came as lawyers in the United States awaited a ruling on a similar issue from the United States Court of Appeals for the Fourth Circuit. A prison warden in southern Virginia has brought suit there against two Connecticut newspapers, contending that he was defamed by articles concerning the treatment of Connecticut prisoners who are currently serving their sentences in Virginia jails. Few if any copies of the newspapers, The Hartford Courant and The New Haven Advocate, are circulated in Virginia, but their Web sites are accessible there.